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Taxing Unpatented Mining Claims, Fremont County sending out Real Property Notice of Valuations
ASTROBLEME
post May 8 2012, 05:05 PM
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Just when I thought I had everything pretty much figured out with mining claim laws, Fremont County sends me a Real Property Notice of Valuation for my unpatented placer mining claims. After running the numbers and reading the fine print, county government was making a demand for several hundred dollars on each claim. No other county has demanded taxes on unpatented claims I hold on BLM lands. After doing a little research, I found this reference to taxing Colorado mining claims;

TITLE 39

I went to the Assessor's Office and complained about the high values and asked how they were determined along with an explanation of why adjacent claims were not being taxed. Well, now they are going to re-asses my claims and send me an updated valuation in a couple of weeks. Both the local BLM Field Office and the Mining Law Administration at the Colorado State BLM Office are looking into this matter as well, since they have never heard of it happening before.

Anyone else ever encounter this?

ASTROBLEME


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swizz
post May 9 2012, 07:04 AM
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I am not sure if they can legally tax unpatented mining claims within their county but I could be wrong of course. Their "Title 39" was written up recently? Can a 'County' just make up rules, tax rates and charges to claim owners... then legally enforce them? Do they have an auditor or new department they are financing now to enforce this "Title 39"?

Fremont County Title 39 states that $5K annual proceeds is the magic number to categorize a claim as what they have defined a "productive claim". They apparently intend to pursue (their definition of) "productive claim" owners for their fair share???? WTF... good luck (County Officials) finding a "productive claim" that is unpatented, turning $5K proceeds (there's that word again), and reporting real numbers (or reporting at all, lol). This reeks of greed by Fremont County and I'm not sure if they can legally impose such a thing, or if they are even capable. I can comprehend them applying property tax to legitimate businesses (with employees, payroll taxes, State and Fed income tax filings established, etc), homeowners, or active/operational mines which are PATENTED but this is a big stretch. What the hell kind of County is Fremont? Sounds greedy, unlawful, and rogue to me... possibly usurping or testing the Federal Mining Laws of 1872. I don't believe that unpatented location claims are legally subject to annual County property taxation.
Is this legal and within a County's rights to impose????

Here are some curious quotes from the Title which cannot make sense:

From Fremont County Title 39:
39-6-105. Producing mines defined.
All mines whose gross proceeds during the preceding calendar year have exceeded the amount of five thousand dollars shall be classified as producing mines, and all others shall be classified as nonproducing mines.

39-6-106. Valuation for assessment of producing mines
(6) This section shall apply to and affect only the valuation of producing mines pursuant to this article.


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swizz
post May 9 2012, 07:37 AM
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QUOTE (swizz @ May 9 2012, 07:04 AM) *
From Fremont County Title 39:
39-6-105. Producing mines defined.
All mines whose gross proceeds during the preceding calendar year have exceeded the amount of five thousand dollars shall be classified as producing mines, and all others shall be classified as nonproducing mines.

Please note something of importance stated (bold) in the above quote. What the hell is "gross proceeds"? Is this some new legal mining or business term I haven't heard of yet? I am assuming they mean "gross income" as pertaining to taxation value. Gross Income (or "proceeds" as they call it) is NOT PROFIT by any means, therefore not quantifiable as a monetary value factor. Freemont County may not redefine "gross proceeds" as "profit" (which translates to subsequent "worth" or "value") neither in the definitive NOR legal sense.
Any small business owner can tell you that "profit" (as in the $5K or more they are attempting to calculate and impose property value tax burden upon) cannot be determined based solely on "gross income".... "net income" is needed to legally quantify what is left over for "profit" and potential property valuation in regard to taxation. "Gross" income vs expenses, overhead, etc determines potential "net income" (value). There are other factors as well which quantify the legal definition of "profit". State and Federal taxation (for example) is based in terms of "net" income.... not "gross proceeds" (whatever the hell that is). Fremont County cannot legally redefine that "gross income" is pure profit thus being a measurement for value or worth as per their $5K qualification clause (quoted above). They define the $5K or more as "gross proceeds" and assumable (by their translation) profit or value... possibly thinking the term is a new property tax valuation loophole for them to benefit from and collect, who knows.
In other words... I may recover $6K total gross in minerals during an annual period on my individual location claim, but have spent $10K to get it. My actual "net income" as a result is minus $4K for the year... Fremont County Title 39 states that Fremont County will evaluate tax property value based solely on that $6K because it is the "gross proceeds" amount which they have defined as profit or a tool for property valuation. Fremont County is trying to base "profit and/or value" on "gross proceeds" if I understand this part of Title 39 correctly. That can't fly, I've never heard the term "gross proceeds" in relation to tax filing.... normally referred to as "gross income". Maybe the term "gross proceed" actually does exist for this purpose and I'm off base. "Gross" is never taxed by Fed and State... "net income" is taxed. Maybe Fremont County should make up another new term: "net proceeds"... frickin idiots.
In addition to apparently goin rogue (or just plain ignorance), Fremont County doesn't even know the elementary process of how "net profit" numbers are determined??? It appears Fremont County has not fully thought this out prior to attempting initiation, enactment, enforcement, and publication of Title 39.
If I am right - Fremont County needs to be challenged. If they enact upon the Title 39 they may be facing Class Action Lawsuits and paying damages. They are proceeding in a rogue, uneducated, and unlawful manner IMHO.


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swizz
post May 9 2012, 07:53 AM
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furthermore....
How does Fremont County determine the actual value of each recovered mineral for purpose of determining $5K "gross proceeds" they intend to base their tax valuation burden on? The market fluctuates DAILY, HOURLY, BY THE MINUTE on mineral values.
Is Fremont County intent or prepared to base property tax values on the "current value" of said mineral or.... how much it was worth when it was pulled from the claim... or average value.... or how much it is worth during tax collection time?? Do they expect "spot price", market value, highest possible value, lowest possible value, specimen value, Kitco 10yr average....or what? If you keep it all and don't sell, is Fremont County stuck with their dicks in their hands? I believe so.... how do you report a profit (or "gross proceeds" exceeding $5K as they threaten) if you haven't sold anything, cashed a check, of made a bank deposit? Will they allow you to pay estimated taxes on a quarterly basis as most small businesses do with State and Fed? Will they send Mineral Police to your house to find and monetarily evaluate your stash... or officially calibrate your scales? In the famous words of Monty Python: "Nooooobody expects the Spanish Inquisition!" LOL It is not as cut & dry as "$5K per year gross proceeds" as they state, obviously they are greedy idiots and possibly outside of the law.
If I'm going to be taxed for ANYTHING I want to know exactly what it is based on, down to the frickin penny.
Maybe I missed the notation in Fremont County Title 39 that states WHEN and BY WHAT STANDARDS to value the mineral(s) they intend to base their property tax values and burdens upon. Much room for legal discrepancy there.
They have opened a can of worms. Glad I don't have a claim within their County, this reeks of greed and crockery.
I am now farting in their general direction. The "gross proceeds" of my flatulence equals less than $5K but I may have violated their noise ordinance. Apologies if I woke up any Fremont County Officials.


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swizz
post May 9 2012, 01:25 PM
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... and finally
Dear Fremont County,
This is Colorado, not California. We don't lie down and we don't sit back and throw money at the GPAA or other BS patsies for invisible legal beagles or action when we are wronged or our rights are ignored.
We are well informed of our mining rights and can/will fight you legally, either individually or as a collective. You can pester the "recreational" peons all you like but this is the Small Scale Miner arena.
Your disease will not spread here. Educated miners will address Title 39, you can be sure. Astrobleme has taken the first steps.
Colorado is a mining state
emoticon-object-018.gif We are prepared. I am prepared. emoticon-object-018.gif





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swizz
post May 9 2012, 02:14 PM
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.... and finally finally (but not finally)

The quote below is vague... to say the least, and not a letter of law by any means. I have not heard of any Colorado Counties enacting upon unpatented location claims for property tax collection prior to Fremont. I believe that Colorado is one of 10 states which can tax but it's been my understanding that unpatented claims are exempt.... still searching. research.gif

Quote:
"Annual taxes are due and payable in States where applicable to the Tax Collectors Office by the end of August. Typically, they will send you an assessment on your property(ies) in the spring followed by a bill they will send to you in July each year. If you don't hear from them, it remains your responsibility as the property owner to be aware of your possible tax liabilities each year, to contact the Tax Collectors office, and meet your annual tax requirements. Your annual taxes are based on their total dollar assessment of your property(ies) for which they charge you approximately 1% in taxes."


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russau
post May 10 2012, 05:47 AM
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Swizz SALUTE!
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ColoradoProspect...
post May 10 2012, 07:19 AM
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This is a real problem as I see it. A "tax" would have to be "assessed" on a specific value to base the tax percentage from as with any other tax but this attempts to allow the county to arbitrarily set values based on reported production figures while there is no "property value" associated to tax.....but yet it states several times "mines will be taxed like any other real property"?!
If the county wanted to assess tax on a mining claim it would need to be based on the property (mineral) value which would require an actual mineral survey for accurate/consistent assessment purposes. Trouble is the county can not require a mineral survey as they would have to foot the bill if its required by their office.
As I understand it, this is why location claims are not taxable.......the mineral value is as of yet undetermined so there is nothing to base any taxation on per value of the mineral property/deposit.

If the county wanted to charge this "fee" then it should be more appropriately designated as such instead of calling it a tax IMHO. Not that they have any reason at all to charge the fee.......it's rediculous!!

I know there are other places (California) where claim owners are illegally "taxed" on location mining claims without any real assessed value of the mineral property within the claim.

I see several more areas of concern within title 39 context, especially regarding disclosing books to county officials?! Are they now going to file personal income taxes for the miner too!? Why in the hell would the county need access to the miners books and where did that come from......no other business has to offer their proprietary books/records up for countys just because the county wants to see how much they made??!!
Seems like they're trying to use production (income) to determine a property value? HMMMMMMM I don't think that's how it's done.

Thanks for posting this Astrobleme, please keep us all posted on what unfolds and definately let us all know if we can help as citizens to speak out somewhere along the line as a collective voice if needed to specifically address this county.
Swizz....right on! We will all stand for our rights as the collective!



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russau
post May 10 2012, 01:18 PM
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well Dan we all know that those dirty miners are getting stinkin rich since the price of gold went through the roof, and they probly arent reporting it! now the countys can get their cut without any work/cost on their part. SIMPLE,its free money for them,untill court time or lawsuit! you can bet the usfs or the blm wispered into someones ear on this!
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ASTROBLEME
post May 10 2012, 10:29 PM
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The staff at BLM's Royal Gorge Field Office put a lot of time into tracking down information on this matter. I'm going to share the response with everyone since the links are very valuable.

"In the State of Colorado, Article 6 of Title 39 of the Colorado Revised Statutes deals with the Valuation of Mines. Some key points are provided below:

Per § 39-6-101(1), C.R.S., “Mine” means one or more mining claims or acres of other land, including all excavations therein from which ores, metals, or mineral substances of every kind are removed, except drilled wells producing sulfur and oil, gas, and other liquid or gaseous hydrocarbons, and all mining improvements within such excavations, together with all rights and privileges thereunto appertaining.

Per § 39-6-101(2), C.R.S., “Mining Claims” means lode, placer, millsite, and tunnelsite claims, whether entered for patent, patented, or unpatented, regardless of size or shape.
Per § 39-6-104, C.R.S., All mines, except mines worked or operated primarily for coal, asphaltum, rock, limestone, dolomite, or other stone products, sand, gravel, clay, or earths, shall, for the purpose of valuation for assessment, be divided into two classes: Producing and nonproducing.
Per § 39-6-105, C.R.S., All mines whose gross proceeds during the preceding calendar year have exceeded the amount of five thousand dollars shall be classified as producing mines, and all others shall be classified as nonproducing mines. Mines shall be classified in the manner provided for in this article regardless of the processing method, the ultimate use, or the consumption of the ores or minerals for which they are primarily worked or operated.
Per § 39-6-116, C.R.S., “Unpatented mining claims”, as used in section 3 (1) (b) of article X of the state constitution, includes mining claims located under the federal mining laws, 30 U.S.C. sec. 22 et seq., for which a patent has not been issued; and such term also includes leasehold interests in real property obtained under the federal “Mineral Lands Leasing Act of 1920”, 30 U.S.C. sec. 181 et seq.

These regulations can be found in their entirety at: http://www.michie.com/colorado/lpext.dll?f...n-h.htm&cp=

The Colorado regulations have been annotated further in a Valuation of Land Manual that was prepared by the Division of Property Taxation, Dep’t of Local Affairs. Chapter 6 of this manual outlines the Valuation of Natural Resources and appears to provide the matrices for tax assessment of mining claims in Colorado. Throughout this chapter, the following language is referenced multiple times, “…nonproducing unpatented mining claims, which are possessory
interests in real property by virtue of leases from the United States of America, shall be exempt from property taxation (§ (3)(1)(b), Art. X, COLO. CONST.)” This manual can be accessed at: http://www.colorado.gov/cs/Satellite?blobc...p;ssbinary=true

The Fremont County Assessor’s Office appears to reference the above manual and regulations, in order to assess the unpatented mining claims that you were questioning. Their website is at: http://www.fremontco.com/assessor/index.shtml

I would encourage you to contact either the county or the state, if you require further assistance with regards to their regulations and requirements. If you have any further inquiries concerning federal requirements, please feel free to email me again."

It took BLM a few days to get back to me but they were very helpful in doing the legal research required in this matter with Fremont County. Now my understanding of the matter is basically non-producing mining claims located under the federal mining laws, 30 U.S.C. sec. 22 et seq., for which a patent has not been issued, shall be exempt from property taxation (§ (3)(1)(b), Art. X, COLO. CONST.)” Thanks to the assistance from the local BLM staff, I now have something to use in support of my rights against an aggressive taxation effort. Wish me luck...I'll need it! emoticon-object-018.gif

ASTROBLEME


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ASTROBLEME
post May 10 2012, 11:42 PM
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Colorado Constitution, Article 10, Taxpayer's Bill of Rights
Section 3, 1(b) states the following…
"Non-producing unpatented mining claims, which are possessory interests in real property by virtue of leases from the United States of America, shall be exempt from property taxation."

This is certainly something a county assessor should follow...don't ya think! emoticon-object-018.gif

ASTROBLEME


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http://www.meteoritecrater.com/

"Some day this crater is going to be a greatly talked about place, and if the above credit is due, as is certainly the case, I would like to have it generally known for the sake of the children." Daniel Moreau Barringer 2/1/1912 in a letter about the Barringer Meteorite Crater, Arizona USA
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Caveman
post May 11 2012, 09:10 AM
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QUOTE (ASTROBLEME @ May 11 2012, 12:42 AM) *
Colorado Constitution, Article 10, Taxpayer's Bill of Rights
Section 3, 1(b) states the following…
"Non-producing unpatented mining claims, which are possessory interests in real property by virtue of leases from the United States of America, shall be exempt from property taxation."

This is certainly something a county assessor should follow...don't ya think! emoticon-object-018.gif

ASTROBLEME



When I went to my cabin for battery maintenance yesterday, I also stopped by the Custer County Clerk and Assessor to inquire about their rules for prospecting (they follow the BLM). I also asked about this issue, and they don't think that Fremont can get away with this, for many reasons - including the above. Please let us know how it goes.

Caveman


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leonard
post May 11 2012, 10:08 AM
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QUOTE (ASTROBLEME @ May 10 2012, 10:42 PM) *
Colorado Constitution, Article 10, Taxpayer's Bill of Rights
Section 3, 1(b) states the following…
"Non-producing unpatented mining claims, which are possessory interests in real property by virtue of leases from the United States of America, shall be exempt from property taxation."

This is certainly something a county assessor should follow...don't ya think! emoticon-object-018.gif

ASTROBLEME



It looks pretty cut and dried from that but who am I to try to interpret lawyereze.

Leonard
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swizz
post May 14 2012, 08:05 AM
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Astro,
Great work!! Thanks for the posted info and links, that is excellent. I was at my County Recorder last Friday filing documents and mentioned it. They did not offer any opinion but stated that they have never "taxed" location claims or heard of it happening. I was charged (small fee) for a County Mining Permit back when I staked and filed but it was a one-time County charge.
Are you planning to notify Fremont County of the erroneous taxation? This seems pretty cut & dried as Leonard said, based on the information you posted. happy088.gif


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ASTROBLEME
post Jun 14 2012, 03:58 PM
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Having heard nothing after I protested in person, I filed a written protest as allowed under Colorado law. The clerk gave me an apology today and advised they were in error. thumbsupsmileyanim.gif

Here's a good lesson for anyone else faced with a similar situation. Follow the law as required and speak up for yourself. This little incident would have cost me over $1,100 each year if I did not follow through with a proper protest of the tax assessment.

This was certainly a fine Flag Day emoticon-object-018.gif

ASTROBLEME


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"Some day this crater is going to be a greatly talked about place, and if the above credit is due, as is certainly the case, I would like to have it generally known for the sake of the children." Daniel Moreau Barringer 2/1/1912 in a letter about the Barringer Meteorite Crater, Arizona USA
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